First off let me say your Customer Service is extremely responsive, very impressed!!

I did a test C2C backup of a folder containing just a few files. I deleted the file and attempted a restore task but it didn't give me any option to choose which file I wanted to restore. I don't have to restore the entire folder do I?

You can restore a single file from the c2c account directly. The easiest way to do this for just one file would be to logon to the c2c backup account, then download the file locally before re-uploading (overwriting) it within the main account. Then the direct automatic restore feature would be used for folders and foldersets to restore.